THE investigation was one of the biggest ever launched, with 22 arrests, 67 raids and 500 officers involved, but it has now been halted.

A SIX-YEAR, multi-million pound investigation into a £500million VAT fraud has been shelved.

One of the biggest probes ever launched in Britain has failed to secure a single conviction.

Twenty-two people were arrested as part of the huge Customs-led probe into so-called carousel fraudsters.

They
included Glasgow businessman Iftakar Iqbal, 47, who was held at his £600,000 home in Glasgow’s south side as part of a nationwide inquiry in
2006.

He was questioned, charged and later released.

Yesterday,
the Crown Office in Edinburgh revealed that the investigation by Customs and Revenue officials into Iqbal and the other suspects had been
“halted for evidential reasons”.

But they added that separate action could be taken against them in the civil courts under proceeds of crime laws.

It is now thought unlikely Iqbal and the other suspects will ever be brought to trial for the massive VAT fraud.

A total of 67 business and home addresses – mostly in Glasgow but also in London and Manchester – were searched in the operation which involved 400 officers from HM Revenue and Customs and 100 police officers. Seventeen of the 22 arrests were made in Scotland.

Sources claim the cost of the huge probe, further inquiries ordered by prosecutors and Legal Aid costs will easily top £1m.

Carousel fraud cost the Treasury up to £10billion a year before a tightening of the law curbed the massive fiddle.

The fraud gangs continually imported and exported small electronic items, such as mobile phone chips, and claimed multiple VAT rebates.

The Crown Office said: “We can confirm that the criminal investigation of individuals linked to a VAT fraud has been halted due to evidential difficulties. HMRC is continuing with civil legal action.”

At
the time of the raid on Iqbal, Gordon Miller, the deputy director of HMRC’s investigations, indicated that a trial could take place within nine months.

At the centre of the investigation is Iqbal’s Diginett firm, which he ran from his home in Pollokshields, Glasgow.

In
July 2007, we revealed how mobile phone importers Diginett, now dissolved, grossed an incredible £28million in a year, despite having only three employees.

The firm eclipsed the turnover of major Scots firms including Irn-Bru maker AG Barr’s and the Old Firm.

Murdered accountant Andrew Ramsay worked as a bookkeeper for Diginett between July 2004 and April 2005.

Murdered Andrew Ramsay

Fishermen
found his skull in the Firth of Clyde in May 2007 after he was abducted
outside his home in Cardonald, Glasgow, 15 months earlier.

Following Ramsay’s disappearance, Iqbal was questioned as a potential witness but later released. He could not be contacted for comment yesterday.

Labour
MSP Ken McIntosh, shadow finance spokesman, said: “It is extremely worrying that a criminal investigation like this has been halted without
even a trial, especially given the hundreds of millions of pounds that has been lost in taxes.”

Fellow
MSP Graeme Pearson – former director of the Scottish Crime and Drug Enforcement Agency – added: “Any civil action to seize the criminal assets of those involved must be quicker.”

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THE fraudsters were believed to be costing UK taxpayers the equivalent of a penny on income tax by repeatedly importing high value small goods, such as mobile phone chips, VAT-free from European neighbours.